The purpose of this assignment is to apply principles and skills associated with profitability analysis and risk analysis and the use of multiple accounting methods to evaluate the financial performance of an organization.Using what you have learned from the topic resources, complete the following problems and cases from the textbook. Prepare the assignment in Excel with each problem or case as a separate tab. All narrative questions should be fully addressed within the Excel document on the tab associated with the problem or case.Problems and Cases 4.25Problems and Cases 4.27Integrative Case 4.1 (part A only)Problems and Cases 5.19
The purpose of this assignment is to apply principles and skills associated with profitability analysis and risk analysis and the use of multiple accounting methods to evaluate the financial performan
The purpose of this assignment is to apply principles and skills associated with profitability analysis and risk analysis and the use of multiple accounting methods to evaluate the financial performance of an organization. Using what you have learned from the topic resources, complete the following problems and cases from the textbook. Problems and Cases 4.25 Problems and Cases 4.27 Integrative Case 4.1 (part A only) Problems and Cases 5.19 4.25 Calculating and Interpreting Proﬁtability Ratios. Abercrombie &Fitch sells casual apparel and personal care products for men, women, and children through retail stores located primarily in shopping malls. Its ﬁscal year ends January 31 of each year. Financial statements for Abercrombie & Fitch for ﬁscal years ending January 31, Year 3, Year 4, and Year 5appear in Exhibit 4.34 (balance sheets), Exhibit 4.35 (income statements), and Exhibit 4.36 (statements of cash ﬂows). These ﬁnancial statements reﬂect the capitalization of operating leases in property, plant, and equipment and long-term debt, a topic discussed in Chapter 6. Exhibit 4.37(page 257) presents ﬁnancial statement ratios for Abercrombie & Fitch for Years 3 and 4. Selected data for Abercrombie & Fitch appear here https://media.cheggcdn.com/study/e85/e850591c-bf7b-4280-b217-73f174032873/13624-4-25PCEI1.png REQUIRED A.Calculate the ratios in Exhibit 4.37 for Year 5. The income tax rate is 35%. b. Analyze the changes in ROA for Abercrombie & Fitch during the three-year period, suggesting possible reasons for the changes observed. c. Analyze the changes in ROCE for Abercrombie & Fitch during the three-year period, suggesting possible reasons for the changes observed. 4.27 Analyzing the Proﬁtability of Two Hotels. Starwood Hotels (Star-wood) owns and operates many hotel properties under well-known brand names, including Sheraton, W, Westin, and St. Regis. Starwood focus es on the upper end of the lodging industry. Choice Hotels (Choice) is primarily a franchisor of several hotel chains, including Comfort Inn, Sleep Inn, Clarion, Econo Lodge, and Rodeway Inn. Choice properties represent primarily them id scale and economy segments of the lodging industry. Exhibit 4.39 presents selected proﬁt-ability ratios and other data for Starwood, and Exhibit 4.40 presents data for Choice. (No te that ROCE is not meaningful for Choice because of negative common shareholders’ equity due to open-market share repurchases, not accumulated deﬁcits. As of the end of 2008, Choice had repurchased over one-third of all common shares issued: 34,640,510 out of 95,345,362 shares.)One of the closely followed metrics in the lodging industry is occupancy rate, which gives an in-dication of the capacity utilization of available hotel rooms. A second measure is the ADR (aver-age daily rate), which measures the amount actually collected for an average room per night.Finally, REVPAR (revenue per available room) also is an important measure, which measures pe-riod-to-period growth in revenues per room for comparable properties (adjusted for properties sold or closed or otherwise not comparable across years). The interaction of occupancy rate and ADR is REVPAR. REQUIRED Analyze the changes and the differences in the proﬁtability of these two hotel chains to the deepest levels available given the data provided. Compare and contrast the ROAs and ROCEs of both companies. Do the results match your prior expectations given the type of lodging for which each company specializes INTEGRATIVE CASE 4.1 Part A Walmart Stores (Walmart) is the world’s largest retailer. It employs an ‘‘everyday low price’’ strategy and operates stores as three business segments: Walmart Stores U.S., International, and Sam’s Club. Walmart Stores U.S.: This segment represented 62.3% of all 2015 sales and operates stores in three different formats: Discount stores (104,000 average square feet), Super-centers (178,000 average square feet), and Neighborhood Markets (42,000 average square feet). Each format carries a variety of clothing, housewares, electronic equipment, pharmaceuticals, health and beauty products, sporting goods, and similar items, and Supercenters include a full-line supermarket.28Walmart U.S. stores are in all 50 states; Washington, D.C.; and Puerto Rico. Discount stores are in 41 states, Supercenters are in49 states, and Neighborhood Markets are in 31 states. Customers also can purchase many items through the company’s website at www.walmart.com.2. International: The International segment includes wholly owned subsidiaries in Argentina, Brazil, Canada, Chile, China, India, Japan, and the United Kingdom; majority-owned subsidiaries are in Africa, Central America, and Mexico. The merchandising strategy for the international segment is like that of the Walmart U.S. segment.3. Sam’s Clubs: Sam’s Clubs are membership club warehouses that operate in 48 states. The average Sam’s Club is approximately 134,000 square feet, and customers can purchase many items through the company’s website at www.samsclub.com. These warehouses offer bulk displays of brand name merchandise, including hard goods, some soft goods, institutional-size grocery items, and certain private-label items. Gross margins for Sam’s Clubs stores are lower than those of the U.S. and International segment 5.19 Computing and Interpreting Bankruptcy Prediction Ratios. Exhibit 5.21 presents selected ﬁnancial data for Best Buy Co., Inc., and Circuit City Stores, Inc., for ﬁscal 2008 and 2007. Best Buy and Circuit City operate as specialty retailers offering a wide range of consumer electronics, service contracts, product repairs, and home installation. Competition from Walmart, Costco, and Internet retailers put downward pressure on prices and margins. In November 2008, Circuit City ﬁled Chapter 7 bankruptcy. In the media, Circuit City’s bankruptcy was largely blamed on its poor treatment of employees. In early 2007, Circuit City laid off 3,40 0 high-paid salespersons, or approximately 8% of its workforce, which left inexperienced, low-paid workers in charge of customer service. Customer service quality plum-meted, which was especially harmful for a retail business providing expensive electronic items, warranty products, and installation services. REQUIREDREQUIRED a. Compute Altman’s Z-score for Best Buy and Circuit City for 2007 and 2008. b. How did the bankruptcy risk of Best Buy change between 2007 and 2008? Explain. c. How did the bankruptcy risk of Circuit City change between 2007 and 2008? Explain
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